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Red Corporation has 1,000 shares of stock outstanding and is owned equally by the following individuals: Al200 shares Bob200 shares Carl200 shares Cindy (Carl's wife)200
Red Corporation has 1,000 shares of stock outstanding and is owned equally by the following individuals:
Al200 shares
Bob200 shares
Carl200 shares
Cindy (Carl's wife)200 shares
Dawn200 shares
Red has E&P of $2,500,000
Red redeems Carl's 200 shares for property worth $1,000,000 with a basis to Red of $250,000
Carl will stay on the Board of Directors after the redemption
Determine the tax consequences to Carl and Red
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